Question111:
Mr. A is running a business under his proprietorship and another business is under his (Mr. A) HUF and having closing stock as on 31/03/2018 respectively Mr. A 1.50Cr. and Mr. A HUF 2.00 Cr. Now Mr A wants to close his said businesses and transfer to both business closing stock repct. 1.50Cr and 2.00 Cr. to his daughter in law, who is running same business under her proprietorship. Now query- 1) Whether Mrs. B (Daughter in law of Mr. A) can transfer closing stock of both businesses under her name proprietary concern without paying any GST' 2) Whether Rule-41 of CGST is applicable in this case' 3) As per credit ledger on GST portal shows in case of Mr. A Rs. 14 lacs as outstanding tax credit as on 31/03/2018 and also another case Mr. A HUF is having Rs. 13.25 Lacs of tax credit as on 31/03/2018, whether Mrs. B (daughter in law of Mr. A) is entitle to take credit of both businesses' Your early reply is highly appreciated.

Answer
Mrs. B can transfer closing stock of both businesses under her name without paying any GST only if the business is transferred on the concept of going concern.
Then as per Schedule II S. no. 4(c) it is not considered as transfer under GST.
The same is reproduced below:

4. Transfer of business assets

-------------------------------------------------------(c) where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless

(i) the business is transferred as a going concern to another person; or

(ii) the business is carried on by a personal representative who is deemed to be a taxable person.

On the other hand "Service by way of transfer of going concern, as a whole or independent part thereof " is exempt under GST vide Notification No. 12/2017- Central Tax (Rate).

The manner of transfer of ITC to transferee unit has been specified in GST rule 41 which is as follows:-
(1) A registered person shall, in the event of sale, merger, de-merger, amalgamation, lease or transfer or change in the ownership of business for any reason, furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, electronically on the common portal along with a request for transfer of unutilized input tax credit lying in his electronic credit ledger to the transferee:
Provided that in the case of demerger, the input tax credit shall be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme.
(2) The transferor shall also submit a copy of a certificate issued by a practicing chartered accountant or cost accountant certifying that the sale, merger, de-merger, amalgamation, lease or transfer of business has been done with a specific provision for the transfer of liabilities.
(3) The transferee shall, on the common portal, accept the details so furnished by the transferor and, upon such acceptance, the un-utilized credit specified in FORM GST ITC- 02 shall be credited to his electronic credit ledger.
(4) The inputs and capital goods so transferred shall be duly accounted for by the transferee in his books of account.

As per above provision transferor (Mr A) before cancellation of registration shall file ITC-02 (with details of CA certficate, GSTIN of transferre e.tc ) on portal by following the path as follows :- Service/ Returns/ITC-forms/ITC-02.
Transferee ( Mrs B ) shall accept the same on GST portal by clicking as follows :- Services/User Services/ "ITC-02- pending for actions". By following the above procedure ITC would transfer in their E- credit ledger. Input and capital goods transferred would also accounted in their books (As per AS).
After that Mr A shall submit for cancellation of registration FORM GST REG-16 with in 30 days of occurrence of the event for cancellation (i.e. Transfer of business). (Rule 20)
On filling GST REG -16 on portal correctly furnished the date of cancellation of registration, reason for surrender and Correct GSTIN of transferee. (Reply dt. 05/31/2018)